By Marta Maretich
The World Economic Forum has come and gone, leaving the Davos snow more than a little trampled. Now that 2,500+ of the world’s most powerful people have flown home in somewhat fewer (it seems) than 1,700 private jets, what do we know about what’s coming in 2015? And, more specifically, what lessons did the Forum hold for impact and social investors?
Impact and social investing are part of the global economic reality, so the larger trends identified at Davos will be felt in our sector, too. Quantitative easing in the Eurozone, the unpredictable fallout from the Grexit, the slowdown in growth in China and India, its surge in the U.S., will all shape the world economic outlook for 2015 and will inevitably have their effects on the social sphere. And yet it was interesting to notice certain issues — some of our own favorite topics — were more prominent on the agenda than they have been in previous years.
Among those in the know, the real indicator that things are changing was the advocacy of Lord Stern, Tony Blair’s climate change adviser. At Davos, he argued cogently that fossil fuel is not, as it long appeared, cheap anymore, and that alternatives are now getting cheaper. Governments don’t have to make a tradeoff between growth and preventing climate change, he said, and his argument seems to be gaining traction in the world of business. It’s one that impact and sustainable investors have long understood, of course, but the mainstreaming of sustainability should bring new opportunities for impact investors and climate-friendly social enterprises alike, especially when it comes to collaborating with business and government.
For impact and social investors, this shift in focus will help in two ways. First, the exit of capital from fossil fuels could spur a renewed wave of investment in existing forms of alternative energy such as wind, solar and hydrogen, and in energy efficient technologies, all areas where impact investing has a track record. Second, turning away from fossil fuels will require more investment into developing new alternative sources of energy. Investment in energy R&D and in companies rolling out alternative energy solutions to new markets will be attractive opportunities for social investors.
Different delegates working in different contexts and sectors interpreted inequality in a number of ways. Piketty is mainly concerned with the current dynamic that sees wealth in societies moving inexorably in one direction — upwards — and accumulating in the hands of fewer and fewer people at the top (such as those attending the Davos conference, for instance). Other kinds of inequality, however, were on the agenda, including the disparity between rich and poor nations, and among different groups, for example women and marginalized groups, within societies.
For impact and social investors, investments aimed at reducing inequality of all kinds are already part of the landscape and can take a number of forms. Affordable loans for college students, edutech that brings learning to those who need it, and provision of healthcare for girls and women are all examples of investments that can help reduce inequality.
Technology also has a role to play. Sheryl Sandberg, when asked by Arianna Huffington, opined that more technology, specifically access to the Internet, and, less specifically, “more data” would bring more equality to the world. Social investments that extend tech to the tech-poor are already on the cards, but more work, targeted specifically on easing inequality, is needed from our sector.
The connection between corruption, poverty and the health of markets is becoming clearer, as is the role of the business community in tackling this scourge. These topics and others were addressed in a number of sessions and an issue briefing at the WEF. Impact and social investors should keep abreast of how this discussion develops and, in keeping with their commitment to ethics, adopt anti-corruption strategies wherever possible.
Yet it can be seen most clearly in the future projects funded by the WEF for next year. Projects on accelerating capital markets in emerging economies and direct investment by institutional investors, for example, point to trends in the markets that could be important for impact investors. Meanwhile, Phase III of the Mainstreaming Impact project has been cleared to move forward, led by Abigail Noble. If the excellent work coming out of this project so far is any indication, this will give us even more data to work with and deepen our understanding of the developments in our own corner of the financial world.
And yet, in another sense, Davos may be less relevant to us than it first appears. As a guage of the status quo — what is now — nothing compares to it. But as a guage of what will be, it falls short. Piketty reminds us all that economics is, after all, not a hard science like mathematics, but a social science with historical underpinnings. Looking at the past is very helpful for understanding the present, as he ably proves. However it doesn’t necessarily help us predict the future with perfect certainty.
For many, Davos is already the past. The future, if committed impact and social investors have their way, could be very, very different.
Image courtesy of the World Economic Forum
About the author: Marta Maretich writes about impact, sustainable and social investing for Maximpact.com, a deal listing portal and information hub for the new finance sector. She is Chief Editor of the Maximpact blog.
About Maximpact: Maximpact is a free global portal for the social, impact and sustainability sectors. It operates as a secure web-based listing service that allows sustainability, philanthropy and CSR professionals, as well as entrepreneurs, intermediaries, and funds to share information about initiatives and impact investment deals, online. For more information on the platform or to review latest impact projects visit: www.maximpact.com. This article first appeared on Maximpact’s blog.
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